Legislature(2011 - 2012)BELTZ 105 (TSBldg)

04/03/2012 03:30 PM COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 9 IN-STATE GASLINE DEVELOPMENT CORP TELECONFERENCED
<Above Item Removed from Agenda>
+ HB 264 MUNI PROPERTY TAX DEFERRAL: SUBDIVISIONS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SB 223 TAX CRED: CONTR. TO HOMELESS SHELT/DETOX
Moved CSSB 223(CRA) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         April 3, 2012                                                                                          
                           3:34 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Donald Olson, Chair                                                                                                     
Senator Thomas Wagoner                                                                                                          
Senator Albert Kookesh                                                                                                          
Senator Linda Menard                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Johnny Ellis                                                                                                            
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Cathy Munoz                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR HOUSE BILL NO. 9(FIN) am                                                                                                 
"An Act  relating to the Alaska  Gasline Development Corporation,                                                               
a subsidiary  created by the Alaska  Housing Finance Corporation;                                                               
establishing and  relating to the  in-state natural  gas pipeline                                                               
fund; making  certain information  provided to  or by  the Alaska                                                               
Gasline  Development  Corporation  exempt from  inspection  as  a                                                               
public   record;  relating   to   the   Joint  In-State   Gasline                                                               
Development Team; relating to the  judicial review of a right-of-                                                               
way lease or an action or  decision related to the development or                                                               
construction of  an oil or  gas pipeline on state  land; relating                                                               
to the lease of a  right-of-way by the Alaska Gasline Development                                                               
Corporation  or  a  successor  in interest  for  a  gas  pipeline                                                               
transportation  corridor;   relating  to  the  cost   of  natural                                                               
resources,  permits, and  leases provided  to the  Alaska Gasline                                                               
Development Corporation;  relating to  the review of  natural gas                                                               
transportation contracts by the  Regulatory Commission of Alaska;                                                               
relating  to  the  regulation by  the  Regulatory  Commission  of                                                               
Alaska  of an  in-state  gas pipeline  project  developed by  the                                                               
Alaska   Gasline  Development   Corporation;   relating  to   the                                                               
regulation by the Regulatory Commission  of Alaska of an in-state                                                               
natural  gas pipeline  that is  expressly  authorized to  provide                                                               
transportation  as a  contract carrier;  relating  to the  Alaska                                                               
Natural Gas  Development Authority;  relating to  the procurement                                                               
of  certain  services  by  the  Alaska  Natural  Gas  Development                                                               
Authority;  exempting  property of  a  project  developed by  the                                                               
Alaska  Gasline  Development   Corporation  from  property  taxes                                                               
before the  commencement of commercial operations;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     - REMOVED FROM AGENDA                                                                                                      
                                                                                                                                
SENATE BILL NO. 223                                                                                                             
"An Act  relating to a  credit against the  net income tax  for a                                                               
contribution made by a taxpayer  to a nonprofit organization that                                                               
provides an emergency shelter for  the homeless or a facility for                                                               
alcohol or drug detoxification."                                                                                                
                                                                                                                                
     - MOVED CSSB 223(CRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 264(CRA)                                                                                
"An Act  allowing a deferral  of municipal property taxes  on the                                                               
increase  in   the  value  of   real  property   attributable  to                                                               
subdivision  of that  property;  and providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 223                                                                                                                  
SHORT TITLE: TAX CRED: CONTR. TO HOMELESS SHELT/DETOX                                                                           
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
                                                                                                                                
03/02/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/02/12       (S)       CRA, FIN                                                                                               
03/15/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/15/12       (S)       Heard & Held                                                                                           
03/15/12       (S)       MINUTE(CRA)                                                                                            
03/27/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/27/12       (S)       Heard & Held                                                                                           
03/27/12       (S)       MINUTE(CRA)                                                                                            
03/29/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/29/12       (S)       Heard & Held                                                                                           
03/29/12       (S)       MINUTE(CRA)                                                                                            
04/03/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: HB 264                                                                                                                  
SHORT TITLE: MUNI PROPERTY TAX DEFERRAL: SUBDIVISIONS                                                                           
SPONSOR(s): REPRESENTATIVE(s) MUNOZ                                                                                             
                                                                                                                                
01/17/12       (H)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (H)       CRA, FIN                                                                                               
02/14/12       (H)       CRA AT 8:00 AM BARNES 124                                                                              
02/14/12       (H)       Heard & Held                                                                                           
02/14/12       (H)       MINUTE(CRA)                                                                                            
02/16/12       (H)       CRA AT 8:00 AM BARNES 124                                                                              
02/16/12       (H)       Moved CSHB 264(CRA) Out of Committee                                                                   
02/16/12       (H)       MINUTE(CRA)                                                                                            
02/17/12       (H)       CRA RPT CS(CRA) 5DP                                                                                    
02/17/12       (H)       DP: AUSTERMAN, CISSNA, GARDNER, FOSTER,                                                                
                         MUNOZ                                                                                                  
02/22/12       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/22/12       (H)       Moved CSHB 264(CRA) Out of Committee                                                                   
02/22/12       (H)       MINUTE(FIN)                                                                                            
02/24/12       (H)       FIN RPT CS(CRA) 5DP 3NR                                                                                
02/24/12       (H)       DP: NEUMAN, GARA, EDGMON, STOLTZE,                                                                     
                         THOMAS                                                                                                 
02/24/12       (H)       NR: FAIRCLOUGH, T.WILSON, DOOGAN                                                                       
03/26/12       (H)       TRANSMITTED TO (S)                                                                                     
03/26/12       (H)       VERSION: CSHB 264(CRA)                                                                                 
03/28/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/28/12       (S)       CRA                                                                                                    
04/03/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DAVID SCOTT, Staff                                                                                                              
Senator Donald Olson                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained the amendment for SB 223.                                                                       
                                                                                                                                
BRIDIE TRAINOR, Director                                                                                                        
Wellness Program                                                                                                                
Kawerak, Inc.                                                                                                                   
Nome, Alaska                                                                                                                    
POSITION STATEMENT: Supported SB 223.                                                                                         
                                                                                                                                
MICHAEL WILLIAMS, Revenue Auditor                                                                                               
Treasury Division                                                                                                               
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions related to SB 223.                                                                     
                                                                                                                                
REPRESENTATIVE CATHY MUNOZ                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of HB 264.                                                                                        
                                                                                                                                
DARRELL BOURNE, Secretary                                                                                                       
Board of Directors                                                                                                              
Alaska State Home Builders Association                                                                                          
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supports HB 264.                                                                                          
                                                                                                                                
DAVID OWENS, Legislative Chair                                                                                                  
Alaska State Home Building Association                                                                                          
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Supported HB 264.                                                                                         
                                                                                                                                
CHARLES EDWARDSON, President                                                                                                    
Alaska State Home Builders Association                                                                                          
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT: Supported HB 264.                                                                                         
                                                                                                                                
BRUCE GRIGGS, Contractor                                                                                                        
SJS Excavation                                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Supported HB 264.                                                                                         
                                                                                                                                
DAVID HANNA                                                                                                                     
General Contractor                                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Supported HB 264.                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:34:06 PM                                                                                                                    
CHAIR  DONALD  OLSON called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 3:34 p.m. Present                                                               
at the  call to order  were Senators Wagoner, Kookesh,  and Chair                                                               
Olson. Senator Menard arrived soon thereafter.                                                                                  
                                                                                                                                
        SB 223-TAX CRED: CONTR. TO HOMELESS SHELT/DETOX                                                                     
                                                                                                                              
3:34:29 PM                                                                                                                    
CHAIR OLSON announced the consideration  of SB 223, which relates                                                               
to  a  tax  credit  for   homeless  shelters  and  detoxification                                                               
facilities. The bill was heard three previous times.                                                                            
                                                                                                                                
DAVID   SCOTT,  Staff,   Senator  Donald   Olson,  Alaska   State                                                               
Legislature, said the committee amended  the bill during the last                                                               
hearing and  it was  held in  committee to  provide time  for the                                                               
public review  the change  and comment.  The committee  has since                                                               
received  letters of  support  from the  Covenant  House and  the                                                               
Alaska Network on Domestic Violence.                                                                                            
                                                                                                                                
CHAIR OLSON asked Mr. Scott to review the bill briefly.                                                                         
                                                                                                                                
3:35:50 PM                                                                                                                    
SENATOR MENARD joined the meeting.                                                                                              
                                                                                                                                
MR. SCOTT  explained that the  bill provides  a tax credit  up to                                                               
$200,000 to a  business that donates to  a nonprofit organization                                                               
that provides  emergency shelter for  the homeless or  a facility                                                               
for alcohol  or drug detoxification.  He highlighted  the changes                                                               
from the  original bill.  The credit is  only available  to those                                                               
nonprofits established on  or before January 1, 2012;  there is a                                                               
five-year sunset  so that a  future legislature can  evaluate the                                                               
program; and DCCED, not the  taxpayer, reports to the legislature                                                               
the amounts of  the contributions, the recipients,  and the total                                                               
credit claimed.                                                                                                                 
                                                                                                                                
3:37:39 PM                                                                                                                    
BRIDIE  TRAINOR,  Director,  Kawerak Wellness  Program,  Kawerak,                                                               
Inc.,  said she  was also  testifying on  behalf of  the regional                                                               
wellness forum.  She stated support for  SB 223 and noted  that a                                                               
letter of support  was also sent by the  regional wellness forum.                                                               
She said  the tax credit bill  is an excellent way  for the state                                                               
to  increase  funding for  homeless  or  facilities that  provide                                                               
alcohol and drug detoxification services.                                                                                       
                                                                                                                                
MS.  TRAINOR said  the regional  hospital in  Nome is  constantly                                                               
helping people who should either  be referred to a detoxification                                                               
center or  admitted to an  inpatient treatment facility,  but are                                                               
instead  held  in  jail temporarily.  She  cited  alcohol-related                                                               
statistics since  the Nome treatment  center closed in  2000. She                                                               
said  services  to  help  the homeless  population  in  Nome  and                                                               
throughout Alaska are  also needed; many in  this population have                                                               
died of exposure. She urged passage of SB 223.                                                                                  
                                                                                                                                
CHAIR OLSON  asked Mr.  Williams what fiscal  impact SB  223 will                                                               
have for the state.                                                                                                             
                                                                                                                                
3:39:51 PM                                                                                                                    
MICHAEL  WILLIAMS,  Auditor,  Treasury  Division,  Department  of                                                               
Revenue, stated that  the fiscal note is  indeterminate; it would                                                               
be based on the amount that  corporations decide to give to these                                                               
nonprofit organizations.                                                                                                        
                                                                                                                                
CHAIR OLSON asked what DOR anticipates in five years.                                                                           
                                                                                                                                
MR.  WILLIAMS  declined  to  speculate until  a  fiscal  note  is                                                               
prepared for version E.                                                                                                         
                                                                                                                                
CHAIR OLSON surmised  that the impact would  be negligible, given                                                               
the size of the state's budget.                                                                                                 
                                                                                                                                
MR.  WILLIAMS responded  that DOR  believes it  would be  able to                                                               
administer the  provision under existing  budgets and  staff. The                                                               
fiscal note  would reflect zero  cost, but there was  no estimate                                                               
at this time on the revenue impact.                                                                                             
                                                                                                                                
CHAIR OLSON asked Mr. Scott if he had closing comments.                                                                         
                                                                                                                                
MR.  SCOTT  stated  that  there  is  a  problem  in  Alaska  with                                                               
homelessness  and  chronic  alcohol  abuse.  The  bill  seeks  to                                                               
encourage help from local philanthropic organizations.                                                                          
                                                                                                                                
3:42:05 PM                                                                                                                    
SENATOR  MENARD commented  that  homelessness  and alcohol  abuse                                                               
affects everyone. She urged support for the bill.                                                                               
                                                                                                                                
CHAIR OLSON  found no further  questions or discussion  and asked                                                               
the will of the committee.                                                                                                      
                                                                                                                                
3:43:03 PM                                                                                                                    
SENATOR  WAGONER  moved  to  report   CS  for  SB  223(CRA)  from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s).                                                                                                                        
                                                                                                                                
3:43:28 PM                                                                                                                    
CHAIR OLSON announced that without  objection CSSB 223(CRA) moved                                                               
from  the   Senate  Community   and  Regional   Affairs  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
At ease from 3:43 p.m. to 3:45 p.m.                                                                                             
                                                                                                                                
        HB 264-MUNI PROPERTY TAX DEFERRAL: SUBDIVISIONS                                                                     
                                                                                                                                
3:45:05 PM                                                                                                                    
CHAIR OLSON announced the consideration  of HB 264, which relates                                                               
to a municipal property tax deferral for subdivisions.                                                                          
                                                                                                                                
3:46:58 PM                                                                                                                    
REPRESENTATIVE CATHY MUNOZ, Alaska  State Legislature, sponsor of                                                               
HB  264 introduced  the bill  speaking to  the following  sponsor                                                               
statement:                                                                                                                      
                                                                                                                                
     Passage of House Bill  264 will give municipalities the                                                                    
     option  to provide  an  incentive to  develop land  for                                                                    
     housing by  deferring for up  to five years  a property                                                                    
     tax  increase associated  with subdividing  a piece  of                                                                    
     property into three or more parcels.                                                                                       
                                                                                                                                
     The measure  would give municipalities  the flexibility                                                                    
     to  defer increases  in  property  taxes on  subdivided                                                                    
     parcels until a lot is sold or a city grants a building                                                                    
     permit for  that piece  of property.  It would  allow a                                                                    
     local government to adopt the optional deferral for all                                                                    
     or a  portion of a  subdivided portion. It would  let a                                                                    
     municipality  decide  the  terms   of  paying  the  tax                                                                    
     deferral and when those payments would be due.                                                                             
                                                                                                                                
     Supporters  of  this  measure  say it  would  remove  a                                                                    
     disincentive for developing privately owned property by                                                                    
     holding  taxes  at  the undeveloped  land  value  until                                                                    
     improvements  occur  that  lead  to  a  parcel's  being                                                                    
     developed and  sold -  thus becoming more  valuable and                                                                    
     capable   of  generating   more   revenues  for   local                                                                    
     governments that choose to exercise this option.                                                                           
                                                                                                                                
     The  purpose   of  the   bill  is  to   encourage  land                                                                    
     development for more housing  and let local governments                                                                    
     decide  whether a  property tax  deferral will  benefit                                                                    
     them.                                                                                                                      
                                                                                                                                
3:47:38 PM                                                                                                                    
SENATOR  MENARD  noted that  the  Alaska  Municipal League  (AML)                                                               
submitted a  letter opposing  HB 264. She  asked if  anything had                                                               
changed since that letter was written.                                                                                          
                                                                                                                                
REPRESENTATIVE MUNOZ responded that AML  was neutral on the bill.                                                               
She emphasized that this was a  tax deferral not an exemption and                                                               
it was optional.                                                                                                                
                                                                                                                                
SENATOR  MENARD  summarized her  understanding  of  the bill  and                                                               
AML's opposition.                                                                                                               
                                                                                                                                
REPRESENTATIVE MUNOZ  said the  intent was  always to  provide an                                                               
option  for  a   tax  deferral,  but  the   original  title  said                                                               
"exemption" and  AML is  generally opposed  to bills  that exempt                                                               
property taxes. AML has since  withdrawn its objection and is now                                                               
neutral on the legislation.                                                                                                     
                                                                                                                                
SENATOR  MENARD suggested  that if  AML revised  its position  it                                                               
should be clarified in the bill packet.                                                                                         
                                                                                                                                
3:50:02 PM                                                                                                                    
REPRESENTATIVE MUNOZ said she agreed.                                                                                           
                                                                                                                                
SENATOR WAGONER asked who would eventually pay the deferred tax.                                                                
                                                                                                                                
REPRESENTATIVE MUNOZ  answered that the responsibility  lies with                                                               
the developer and the deferred tax is due when the lot sells.                                                                   
                                                                                                                                
CHAIR OLSON asked if the purchaser actually pays.                                                                               
                                                                                                                                
REPRESENTATIVE  MUNOZ  answered  that  it  becomes  part  of  the                                                               
carrying cost  for the development  of the land. The  bill allows                                                               
the  developer to  move forward  without the  additional carrying                                                               
costs of  ongoing property tax  from increased  assessments. This                                                               
makes development in communities more likely.                                                                                   
                                                                                                                                
SENATOR   MENARD   reviewed   the  provisions   and   asked   for                                                               
confirmation  that   the  developer  would  eventually   pay  the                                                               
deferred taxes.                                                                                                                 
                                                                                                                                
REPRESENTATIVE MUNOZ  said yes; it  is an optional  provision for                                                               
up  to five  years  on all  or  a  portion of  the  parcels in  a                                                               
subdivision.                                                                                                                    
                                                                                                                                
SENATOR MENARD asked who would decide  if the deferral is for all                                                               
the parcels or just a portion.                                                                                                  
                                                                                                                                
REPRESENTATIVE MUNOZ answered that it  would be done by municipal                                                               
ordinance.                                                                                                                      
                                                                                                                                
SENATOR MENARD asked if municipalities negotiated for that.                                                                     
                                                                                                                                
REPRESENTATIVE   MUNOZ  answered   no;   optional  property   tax                                                               
exemptions and  deferrals must be instigated  by the municipality                                                               
through ordinance.                                                                                                              
                                                                                                                                
SENATOR  KOOKESH  asked  how  she   decided  that  three  parcels                                                               
constitutes a subdivision.                                                                                                      
                                                                                                                                
REPRESENTATIVE MUNOZ said  the intent was to  avoid the situation                                                               
of an  individual subdividing  their property  into two  lots and                                                               
not  developing one  in  order to  defer  taxes. The  legislation                                                               
seeks to increase housing stock in the community.                                                                               
                                                                                                                                
3:53:16 PM                                                                                                                    
SENATOR KOOKESH asked for clarification  that dividing a piece of                                                               
property into  two parcels  is not  considered a  subdivision but                                                               
three parcels is considered a subdivision.                                                                                      
                                                                                                                                
REPRESENTATIVE MUNOZ reiterated her previous answer.                                                                            
                                                                                                                                
CHAIR OLSON  commented the intention  is to keep  property owners                                                               
from manipulating the system.                                                                                                   
                                                                                                                                
REPRESENTATIVE  MUNOZ  responded that  she  would  hope to  avoid                                                               
that.                                                                                                                           
                                                                                                                                
SENATOR MENARD asked how many Alaskans own five acres.                                                                          
                                                                                                                                
REPRESENTATIVE MUNOZ  said she could  not speak to the  number of                                                               
parcels this  would affect,  but Juneau has  a very  limited land                                                               
base and  the bill  seeks to encourage  more development  of that                                                               
limited land base.  .                                                                                                           
                                                                                                                                
CHAIR OLSON asked how this  would affect second-class cities that                                                               
do not have a property tax.                                                                                                     
                                                                                                                                
REPRESENTATIVE MUNOZ  answered that  in areas  where there  is no                                                               
planning  and zoning  authority, the  deferral would  end when  a                                                               
property is developed or sold.                                                                                                  
                                                                                                                                
CHAIR  OLSON  asked how  properties  in  the unorganized  borough                                                               
would be affected.                                                                                                              
                                                                                                                                
REPRESENTATIVE  MUNOZ  reiterated  that  in  those  jurisdictions                                                               
without a  permitting authority, the  deferral ends when  a house                                                               
is built or a lot is sold.                                                                                                      
                                                                                                                                
CHAIR OLSON opened public testimony.                                                                                            
                                                                                                                                
3:56:07 PM                                                                                                                    
DARRELL BOURNE, Secretary, Board  of Directors, Alaska State Home                                                               
Builders  Association,  and  President Interior  Alaska  Building                                                               
Association,  testified in  support  of HB  264.  He relayed  his                                                               
experience  as a  partner  in a  52-acre  subdivision outside  of                                                               
Fairbanks. The roads and power  were completed five years ago and                                                               
two ten-acre parcels  were subdivided so that he  and his partner                                                               
could  build new  homes. However,  the new  home market  has been                                                               
soft and  they have sold just  three homes. The only  interest is                                                               
from the higher-end  market and those people  want the riverfront                                                               
lots that have yet to be subdivided.                                                                                            
                                                                                                                                
MR. BOURNE said that if the  Fairbanks North Star Borough were to                                                               
adopt this  amendment, he was  confident that he and  his partner                                                               
could accommodate two people who  were interested in having homes                                                               
built  this  summer. HB  264  would  have  a positive  effect  on                                                               
Fairbanks builders and the local government tax base, he stated.                                                                
                                                                                                                                
3:59:24 PM                                                                                                                    
SENATOR  MENARD asked  if  he  was referring  to  spec or  custom                                                               
homes.                                                                                                                          
                                                                                                                                
MR. BOURNE answered he was talking  about custom homes. If HB 264                                                               
were to  pass, he could  subdivide four or five  riverfront lots,                                                               
sell two, and have up to five  years to sell the others before he                                                               
had to pay the higher taxes.                                                                                                    
                                                                                                                                
CHAIR OLSON asked if there  are developers that might go bankrupt                                                               
if this bill did not pass.                                                                                                      
                                                                                                                                
MR. BOURNE  answered that he did  not know, but this  year is the                                                               
most  difficult in  recent years.  He added  that the  bill would                                                               
directly affect him and one or two others in the association.                                                                   
                                                                                                                                
SENATOR MENARD asked  if the high-energy costs  in Fairbanks were                                                               
a factor in the soft new home market.                                                                                           
                                                                                                                                
MR. BOURNE answered yes.                                                                                                        
                                                                                                                                
4:02:15 PM                                                                                                                    
DAVID  OWENS,  Legislative  Chair,  Alaska  State  Home  Builders                                                               
Association, testified in  support of HB 264. It  is expensive to                                                               
develop property  so it would be  beneficial to be able  to defer                                                               
the  higher taxes  until the  lots are  sold. It  would encourage                                                               
development  of  an  entire  subdivision  instead  the  piecemeal                                                               
approach. He encouraged the committee to pass the bill.                                                                         
                                                                                                                                
4:03:37 PM                                                                                                                    
CHARLES   EDWARDSON,  President,   Alaska  State   Home  Builders                                                               
Association and Workforce  Development Director, Ketchikan Indian                                                               
Community (KIC), testified in support  of HB 264. He relayed that                                                               
KIC is developing  19 city lots to  construct affordable housing.                                                               
If the municipality takes advantage  of the provisions in HB 264,                                                               
it might  accelerate this development. He  reiterated support for                                                               
the bill.                                                                                                                       
                                                                                                                                
4:06:27 PM                                                                                                                    
BRUCE  GRIGGS, Contractor,  SJS Excavation,  said he  had been  a                                                               
developer in the Juneau area for  15 years. He described a seven-                                                               
lot  subdivision near  McDonalds that  he had  worked on  for six                                                               
years.  The property  tax  on the  raw piece  of  land was  about                                                               
$1,000 per  month, but it increased  to $3,500 per month  as soon                                                               
as the  property was  platted. To  date, he  and his  family have                                                               
paid an  additional $62,000  in property tax  on that  parcel. He                                                               
relayed  that he  was afraid  to submit  the plat  and apply  for                                                               
permits on  another much larger  parcel because the  property tax                                                               
would immediately  increase before  any development  takes place.                                                               
It does not make economic sense to move ahead.                                                                                  
                                                                                                                                
CHAIR OLSON asked how developers stay in business.                                                                              
                                                                                                                                
MR.  GRIGGS  acknowledged  that  it   was  a  good  question.  He                                                               
described  a  development  from  several years  ago  that  was  a                                                               
"homerun," but since then the market dropped.                                                                                   
                                                                                                                                
SENATOR WAGONER  pointed out  that this  does not  guarantee that                                                               
the borough will change the tax policy.                                                                                         
                                                                                                                                
MR. GRIGGS  responded that the  City and Borough of  Juneau (CBJ)                                                               
indicated it would adopt this option.                                                                                           
                                                                                                                                
SENATOR MENARD asked if he had appealed the assessment.                                                                         
                                                                                                                                
MR. GRIGGS said $3,500 a month was the appealed price.                                                                          
                                                                                                                                
SENATOR MENARD relayed a personal experience.                                                                                   
                                                                                                                                
4:15:02 PM                                                                                                                    
DAVID HANNA, General Contractor, testified  in support of HB 264.                                                               
He  said  he  had  been  floating this  idea  for  10  years  and                                                               
Representative Munoz was the first  legislator to bring it forth.                                                               
He  said  not  everybody  understands how  difficult  it  is  for                                                               
developers  to  get   things  done  in  many   parts  of  Alaska.                                                               
Developing  a subdivision  is a  time-consuming, costly  process,                                                               
and  property  taxes  increase  before a  shovelful  of  dirt  is                                                               
turned. This  causes developers to  hold back and  sometimes they                                                               
miss a  boom. Even  sadder is  when a developer  is sitting  on a                                                               
subdivision, paying  higher taxes,  and has  no sales.  Often the                                                               
developer will not go forward  with the subdivision. This creates                                                               
a diminished basis of land  available for people to build houses.                                                               
HB 264 will help this situation.                                                                                                
                                                                                                                                
                                                                                                                                
SENATOR  MENARD asked  if banks  were  holding back  on lines  of                                                               
credit.                                                                                                                         
                                                                                                                                
MR. HANNA  confirmed that  it was  much more  difficult to  get a                                                               
loan for any speculative venture.                                                                                               
                                                                                                                                
SENATOR MENARD observed that that  was another strong argument in                                                               
support of the bill.                                                                                                            
                                                                                                                                
CHAIR OLSON  questioned why boroughs and  municipalities couldn't                                                               
do this individually in order to encourage development.                                                                         
                                                                                                                                
4:21:21 PM                                                                                                                    
REPRESENTATIVE  MUNOZ  said state  law  requires  property to  be                                                               
assessed at fair  market value, so as soon as  a subdivision plat                                                               
is  approved   the  municipality  is  compelled   to  adjust  the                                                               
assessment even though no work has occurred.                                                                                    
                                                                                                                                
She thanked  the committee for  hearing the bill and  opined that                                                               
it  was  a  good  piece   of  legislation.  It  is  flexible  and                                                               
incorporates  the  concerns   of  municipalities  throughout  the                                                               
state.                                                                                                                          
                                                                                                                                
CHAIR OLSON held HB 264 in committee.                                                                                           
                                                                                                                                
4:23:14 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Olson  adjourned the Senate Community  and Regional Affairs                                                               
Standing Committee meeting at 4:23 p.m.                                                                                         

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